Kin Group Regulatory News (KIN)

2 Nov 2005 07:00

Kiln PLC02 November 2005 Kiln PLC For publication in the United Kingdom only. Not for release, publication,transmission or distribution directly or indirectly in or into any otherjurisdiction including the United States of America, Canada, Japan, Australia,New Zealand, the Republic of South Africa or the Republic of Ireland. Kiln plc ("Kiln") announces a Rights Issue to raise £72.8 million Terms of the Rights Issue • £72.8 million (net of expenses) to be raised through a Rights Issue. • 3 Issue Shares for every 7 Existing Ordinary Shares. • Fully underwritten by Numis other than in respect of approximately17.6 million Issue Shares for which Berkley Insurance Company has irrevocablyundertaken to subscribe in order to take up the rights to which it isbeneficially entitled under the Rights Issue in full. • Issue Price of 87p per share under the Rights Issue which represents adiscount of 16 per cent. to the closing price of 103.5p on 1 November 2005, thelast dealing day prior to this announcement. Background to and reasons for the Rights Issue • Following the impact of the US Hurricanes, Kiln is expectingunderwriting conditions in its core specialist areas in 2006 to be attractive,with overall rate increases of 12.5 per cent. Individual property risks, UScatastrophe reinsurance risks and offshore energy risks are forecast to increaseby 23 per cent., 23 per cent. and 46 per cent. respectively. • Kiln intends to respond to these improved underwriting conditions byincreasing the capacity of all of its managed Syndicates for the 2006underwriting year of account and by increasing its ownership of underwritingcapacity on Kiln's flagship Syndicate 510. • At least £40 million of the net proceeds will be used to acquirecapacity on Syndicate 510 and to provide additional funds at Lloyd's to supportthe increased underwriting participation of the Kiln Corporate Members for the2006 year of account. The balance of the net proceeds provides flexibility toacquire and support additional capacity and will strengthen Kiln's capital andliquidity position. Financial effects and prospects • It remains Kiln's intention, in the absence of exceptional unforeseencircumstances, that the full year dividend will be at or above 3p per share andthat this level will be maintained throughout the insurance business cycle. • The Rights Issue is expected to be enhancing to net assets andearnings in the medium term. • The Directors are confident that Kiln will be able to finance itsforeseeable future capital requirements without further recourse toShareholders. Edward Creasy, Chief Executive of Kiln, said: "We believe that the underwriting conditions for 2006 and future years havechanged markedly for the better as a result of the losses caused to theinsurance and reinsurance industry by the US Hurricanes. The Rights Issue willallow our shareholders to benefit from a greater share of the returns generatedby our specialist underwriting expertise within this environment and enhanceKiln's financial flexibility." The Rights Issue is conditional upon, inter alia, Shareholder approval of theResolutions to be proposed at the Extraordinary General Meeting of the Company("EGM") which is expected to be held on 25 November 2005. This summary should be read in conjunction with the detailed announcement whichfollows. Section 8 of the full announcement contains the definitions of certainterms used in this summary and the full announcement. A presentation for analysts will be held at 10.30 a.m. on 2 November 2005 atKiln's registered offices, 106 Fenchurch Street, London EC3M 5NR. 2 November 2005 EnquiriesKiln 020 7886 9000Edward Creasy College Hill 020 7457 2020Tony Friend Numis 020 7776 1500Oliver Hemsley Lexicon Partners 020 7653 6000Angus Winther This announcement does not constitute, or form part of, an offer to sell, or thesolicitation of an offer to subscribe for or buy any of the Issue Shares to beissued in connection with the Rights Issue. Any decision to invest in the IssueShares should only be made on the basis of information in the Prospectus whichwill contain further details relating to the Rights Issue and Kiln and which isexpected to be issued shortly. In addition, the Prospectus will be accompaniedby a notice convening the EGM. The Directors of Kiln have taken all reasonable care to ensure that theinformation contained in this announcement is, to the best of their knowledge,in accordance with the facts and contains no omission likely to affect theimport of such information. Numis, which is regulated in the United Kingdom by the Financial ServicesAuthority, is acting as sponsor, joint financial adviser, corporate broker andunderwriter to Kiln plc in relation to the matters described in thisannouncement and is not acting for any other person and will not be responsibleto any other person for providing the protections afforded to customers of Numisnor for advising them on the contents of this announcement or any other matterin relation to the Rights Issue. Lexicon Partners, which is regulated in the United Kingdom by the FinancialServices Authority, is acting as joint financial adviser to Kiln plc in relationto the matters described in this announcement and is not acting for any otherperson and will not be responsible to any other person for providing theprotections afforded to customers of Lexicon Partners nor for advising them onthe contents of this announcement or any other matter in relation to the RightsIssue. The contents of this announcement have been approved by Numis solely for thepurposes of section 21(2)(b) of the Financial Services and Markets Act 2000. The release, publication or distribution of this announcement in certainjurisdictions may be restricted by law and therefore persons in suchjurisdictions into which this announcement is released, published or distributedshould inform themselves about and observe such restrictions. THIS ANNOUNCEMENT DOES NOT CONSTITUTE, OR FORM PART OF, AN OFFER TO SELL OR THESOLICITATION OF AN OFFER TO SUBSCRIBE FOR OR BUY ANY SECURITIES, NOR THESOLICITATION OF ANY VOTE OR APPROVAL IN ANY JURISDICTION, NOR SHALL THERE BE ANYSALE, ISSUE OR TRANSFER OF THE SECURITIES REFERRED TO IN THIS ANNOUNCEMENT INANY JURISDICTION IN CONTRAVENTION OF APPLICABLE LAW. These written materials are not an offer of securities for sale in the UnitedStates. Securities may not be offered or sold in the United States absentregistration under the US Securities Act of 1933 (the "US Securities Act") or anexemption therefrom. Kiln has not and does not intend to register any of theProvisional Allotment Letters, Nil Paid Rights, Fully Paid Rights or IssueShares under the US Securities Act. The Provisional Allotment Letters, Nil PaidRights, Fully Paid Rights and Issue Shares will not be offered or sold to thepublic in the United States. Kiln announces a Rights Issue to raise £72.8 million 1. Introduction Kiln announces today that it is to raise approximately £72.8 million (net ofexpenses) by means of a Rights Issue. The Rights Issue of up to 87.4 millionIssue Shares at 87p per share is being made to Qualifying Shareholders on thebasis of: 3 Issue Shares for every 7 Existing Ordinary Shares registered in their name on the Record Date and so in proportion for any othernumber of Existing Ordinary Shares then held. The Rights Issue has been fully underwritten by Numis other than in respect ofapproximately 17.6 million Issue Shares for which Berkley Insurance Company, a20.1 per cent. beneficial shareholder in the Company, has irrevocably undertakento the Company and Numis to subscribe in order to take up the rights to which itis beneficially entitled under the Rights Issue in full. The Issue Price of 87p per share under the Rights Issue represents a discount of16 per cent. to the closing middle market price of 103.5p per Existing OrdinaryShare on 1 November 2005, the last dealing day prior to the announcement of theRights Issue. The Rights Issue is conditional upon, inter alia, Shareholder approval of theResolutions to be proposed at the Extraordinary General Meeting of the Companywhich is to be held on 25 November 2005. 2. Information on Kiln Kiln is the holding company of an international insurance and reinsurance group,listed on the Official List, which specialises in underwriting non-standardcommercial risks. Kiln conducts its underwriting business through four Lloyd'ssyndicates managed by its wholly-owned subsidiary, R J Kiln. R J Kiln is one ofthe largest managing agencies operating in the Lloyd's insurance market for the2005 year of account, with approximately £704 million of capacity undermanagement, supported by a combination of the Kiln Corporate Members and thirdparty Lloyd's Names. Kiln's strategy is to provide differentiated returns for Shareholders fromunderwriting short-tail, specialist lines of insurance and reinsurance businesswhere both the incidence and scale of losses are quickly apparent. Kiln takes aprudent approach to capital and debt management, reserving risk and investmentrisk and has set itself a corporate principle of underwriting for profit ratherthan volume. Kiln's strategy is facilitated by the specialist expertise ofKiln's experienced and well-trained underwriters as well as Kiln's long-standingbusiness relationships. Kiln is adept at managing the insurance cycle, demonstrating a good track recordof opportune expansion of underwriting capacity in response to favourableunderwriting conditions and subsequent corresponding reductions as marketconditions deteriorate. As an example, Kiln increased its total grossunderwriting capacity (including qualifying quota share capacity) from £405million in 2001 to £820 million by 2003 to take advantage of the favourableunderwriting conditions following the US Terror Attacks, and then subsequentlyreduced underwriting capacity in 2004 and 2005 in response to the modestdeterioration in underwriting conditions. This responsiveness to marketconditions has been a critical factor in enabling Kiln to generate attractivecross-cycle returns on shareholder capital. 3. Background to and reasons for the Rights Issue Record interim results Kiln's strong performance over recent years continued during the first half of2005, with Kiln announcing record profits before tax of £34.3 million for thesix months to 30 June 2005 in its unaudited interim results, an increase of 24per cent. from £27.6 million for the same period in 2004. This resulted inearnings per share of 11.2p, an increase of 19 per cent. from 9.4p in the firstsix months of 2004, providing an annualised return on equity of 33.5 per cent.compared with the annualised return on equity of 33.7 per cent. for the sixmonths to 30 June 2004. As at 30 June 2005, net assets amounted to £163.6million or 80.2p per share. Kiln's record interim results were achieved despite a modest decline in marketconditions, particularly in those classes of business which had not sufferedlosses as a result of the 2004 US hurricane season. Kiln's own internalmonitoring systems showed a decline in pricing of 1.5 per cent. on renewalbusiness during the period and, in addition, the volume of new business writtenwas only 14 per cent. of the total portfolio, compared with 23 per cent. for thesame period in 2004. US Hurricane losses The second half of 2005 has seen increasing claims for Kiln, most notably inrespect of Hurricane Katrina, a widespread category four hurricane whichresulted in devastation in the Gulf of Mexico and the southern United States.Hurricane Rita, a category three hurricane following in Katrina's wake, thenaffected the same geographic region. On 12 October 2005, the Directors announced that their estimate of the pre-taxcost of Hurricanes Katrina and Rita for Kiln plc shareholders was £42.5 - 52.5million. The loss to Kiln from these hurricanes falls principally on itsproperty catastrophe reinsurance, property, offshore energy and marineportfolios of business. Hurricane Katrina is a complex loss, and it will be a substantial period of timebefore the precise outcome of the costs of the insured losses is known.Hurricane Rita is a much less complex loss, and it should therefore take lesstime for a reliable estimate of the loss to be made. Whilst there is a degree ofuncertainty in establishing the eventual outcome of losses arising fromHurricanes Katrina and Rita, Kiln's specialist nature and focus on short tailbusiness lines allows a relatively swift assessment of potential losses comparedwith other longer tail business lines. As an example, Kiln's estimate of itsexposure to the complex losses resulting from the US Terror Attacks in 2001 hasremained broadly constant, with its estimate as at 31 December 2004 of £15million comparing favourably to its initial estimate, issued on 19 September2001, of £16 million. Kiln's response to the change in the underwriting environment In accordance with Kiln's focus on underwriting for profit rather than premiumvolume, Kiln had been anticipating that it would reduce its underwritingcapacity for 2006, in anticipation of a further decline in renewal rates of 7per cent. Following the US Hurricane losses described above, a thorough reviewof the previous 2006 business plan assumptions was undertaken by R J Kiln andnew business plans were prepared. As a consequence, Kiln underwriters are nowpredicting overall rate increases of some 12.5 per cent. for 2006, withindividual property risks, US catastrophe reinsurance and offshore energy risksforecast to rise by 23 per cent., 23 per cent. and 46 per cent. respectively.The Directors therefore anticipate a significant improvement in the currentpricing environment, together with the imposition of restrictions in insurancepolicy terms and conditions, reversing the modest weakening experienced in thefirst half of 2005. Kiln now intends to respond to the improved underwriting conditions in its corespecialist areas by increasing the capacity of all of its managed Syndicates forthe 2006 underwriting year of account and by increasing its ownership ofunderwriting capacity on Kiln's flagship Syndicate 510. This is in line withKiln's strategy to increase gradually and steadily its participation onSyndicate 510 and to maintain or reduce its ownership of capacity on the otherSyndicates managed by R J Kiln. The following table sets out the proposed increases in managed capacity for the2006 underwriting year based on the revised business plans which were submittedto Lloyd's on 22 September 2005, compared with the managed capacity for 2005 andthe managed capacity proposed in the initial business plans for 2006 which hadbeen submitted to Lloyd's in June 2005: Managed capacity Previous Proposal for Revised Proposal for % Revised vs. 2005 2006 Capacity 2006 Capacity Previous ProposalSyndicate £m £m £m %510 546.1 470.0 625.2 +33%807 100.0 100.0 110.0 +10%557 47.8 47.8 54.8 +15%308 9.7 13.0 13.0 -Total 703.6 630.8 803.0 +27% The Kiln Corporate Members' underwriting participations on the R J Kiln managedSyndicates will change as a result both of the increase in managed capacity asset out above and as a result of changes in the Kiln Corporate Members'proportionate participation on the R J Kiln managed Syndicates. In 2005, the Kiln Corporate Members' participation on Syndicate 510 amounted to£226 million, or 41 per cent. of Syndicate 510 capacity. During 2005, Kiln hasbeen successful in purchasing additional capacity on Syndicate 510 in theLloyd's capacity auctions. Thus far, in the first three capacity auctions, Kilnhas purchased £28 million of capacity on Syndicate 510 at a total cost of £2.0million (equivalent to an average price of 7 pence per £1 of capacity). Thiswill result in the Kiln Corporate Members' minimum participation on Syndicate510 for 2006 being £291 million or approximately 47 per cent. of Syndicate 510'smanaged capacity and represents an increase of 29 per cent. on the KilnCorporate Members' underwriting participation on Syndicate 510 for the 2005 yearof account. In addition, the Directors believe there may be an opportunity toacquire further capacity on Syndicate 510 in the fourth capacity auction (due totake place on 15 and 16 November 2005), and that certain Names may be unwillingor unable to take up their increased participations in full, causing additionalcapacity to be returned to R J Kiln at nil cost. For the 2006 year of account, Kiln intends that the Kiln Corporate Members'participations on Syndicate 807 and Syndicate 308 will increase to £50 millionand £7 million respectively, with a greater proportion of these participationsbeing supported by GQS arrangements. The Kiln Corporate Members will cease toparticipate on Syndicate 557 in 2006, due to its relatively high risk profileand capital requirements. The minimum overall underwriting participation of the Kiln Corporate Members forthe 2006 year of account will be £349 million, an increase of 24 per cent. over2005. Based on this minimum underwriting participation and an anticipated ECAratio of 50 per cent., the Directors estimate that the Kiln Corporate Memberswill have to provide at least £175 million in funds at Lloyd's for the 2006 yearof account (compared with £125 million of funds at Lloyd's supporting the 2005year of account). The Board has considered a number of options for accessing theadditional capital required to support this increased underwritingparticipation, including, inter alia, raising subordinated debt and accessingadditional reinsurance capital in the form of GQS arrangements. The Board hasconcluded, however, that the majority of the required funds would be bestprovided by an equity capital raising. The net proceeds of the Rights Issue are expected to be £72.8 million, of whichat least £40 million will be used to acquire capacity on Syndicate 510 andprovide additional funds at Lloyd's to support the increased underwritingparticipation of the Kiln Corporate Members for the 2006 year of account. Thebalance of the proceeds, a further £32.8 million, is being raised to provide theGroup with the necessary flexibility to acquire and support further underwritingcapacity, should Names choose either to sell capacity in the fourth capacityauction or to return part of their underwriting capacity entitlements, and tostrengthen further Kiln's capital and liquidity position. 4. Financial position, prospects and dividend policy Kiln's results for the year to 31 December 2005 will inevitably depend, interalia, on the extent of further catastrophic events occurring during theremainder of the year. It remains Kiln's intention, however, that, in theabsence of exceptional unforeseen circumstances, the full year dividend will beat or above 3p per share and that this level will be maintained throughout theinsurance business cycle. The Directors believe that the Rights Issue will be enhancing to net assets andearnings in the medium term. The Directors are confident that, in the ordinary course of business and takinginto account the net proceeds of the Rights Issue, Kiln's banking facilities andother sources of capital, Kiln will be able to finance its foreseeable futurecapital requirements without further recourse to Shareholders. Kiln is exploring alternatives for managing additional underwriting capacity inorder to enable its underwriting team to take maximum advantage of the improvedtrading conditions. In particular, Kiln believes that there is now anopportunity to underwrite additional property catastrophe reinsurance andretrocession business to a much greater extent than may be possible within theconstraints imposed by the Lloyd's business planning process and Kiln's riskappetite. Kiln is therefore exploring ways to access alternative third partysources of capital, without further recourse to Shareholders, to address theseopportunities. 5. Principal terms of the Rights Issue General Under the terms and conditions of the Rights Issue, Qualifying Shareholders willbe offered, by way of rights, Issue Shares at a price of 87 pence per IssueShare (being a 16 per cent. discount to the closing middle market price of 103.5pence per Existing Ordinary Share on 1 November 2005, the last dealing day priorto the announcement of the Rights Issue). The Rights Issue is expected to raise approximately £72.8 million (net ofexpenses) and will result in the issue of 87,413,607 Issue Shares (representingapproximately 30.0 per cent. of the Enlarged Share Capital). Subject to the fulfilment of certain conditions, Qualifying Shareholders arebeing offered, by way of rights, Issue Shares at a price of 87 pence per shareon a following basis: 3 Issue Shares for every 7 Existing Ordinary Shares held by Qualifying Shareholders at the Record Date and so in proportion for anyother number of Existing Ordinary Shares then held. The Rights Issue has been fully underwritten by Numis other than in respect ofapproximately 17.6 million Issue Shares for which Berkley Insurance Company, a20.1 per cent. beneficial shareholder in the Company, has irrevocably undertakento the Company and Numis to subscribe in order to take up the rights to which itis beneficially entitled under the Rights Issue in full. Berkley InsuranceCompany has also undertaken to sub-underwrite 14.0 million of those Issue Sharesunderwritten by Numis pursuant to the Underwriting Agreement on the same termsand conditions as other sub-underwriting commitments which are being procured byNumis. Berkley Insurance Company's beneficial shareholding in the Company wouldincrease to 24.9 per cent. if Berkley Insurance Company was required tosubscribe for all of these Issue Shares under the terms of the UnderwritingAgreement. Holdings of Existing Ordinary Shares in certificated and uncertificated formwill be treated as separate holdings for the purposes of calculatingentitlements under the Rights Issue. Fractions of Issue Shares will not beallotted, each Qualifying Shareholder's entitlement being rounded down to thenearest whole number. The Issue Shares, when issued and fully paid, will rankpari passu in all respects with the Existing Ordinary Shares and will rank forall dividends or other distributions declared, made or paid after the date ofissue of the Issue Shares. The Rights Issue is conditional, inter alia, upon: (i) the passing of the Resolutions (without amendment) at the ExtraordinaryGeneral Meeting and not (without the consent of Numis) at any adjournmentthereof; (ii) the Underwriting Agreement becoming unconditional in all respects (save forthe condition relating to Admission) and having not been terminated inaccordance with its terms prior to Admission; and (iii) Admission becoming effective by not later than 8.00 a.m. on 28 November2005 (or such later time and/or date as Numis and the Company may agree, notbeing later than 8.00 a.m. on 10 January 2006). Applications will be made to the UKLA and to the London Stock Exchange for theIssue Shares to be admitted to the Official List and to trading on the LondonStock Exchange's market for larger and established companies, respectively. Itis expected that Admission will become effective on 28 November 2005 and thatdealings in the Issue Shares will commence, nil paid, at 8.00 a.m. that day and,fully paid, at 8.00 a.m. on 21 December 2005. The latest time and date for acceptance and payment in full in respect ofentitlements under the Rights Issue is expected to be at 11.00 a.m. on 16December 2005. Qualifying non-CREST Shareholders Subject to the Resolutions being passed, Qualifying non-CREST Shareholders willbe sent a Provisional Allotment Letter on 25 November 2005 which will indicatethe number of Issue Shares provisionally allotted to such Qualifying non-CRESTShareholder pursuant to the Rights Issue. Qualifying non-CREST Shareholdersshould retain the Prospectus pending the receipt of a Provisional AllotmentLetter. Qualifying non-CREST Shareholders should note that, other than anyProvisional Allotment Letter, they will receive no further communication fromthe Company in respect of this document. Qualifying CREST Shareholders Subject to the Resolutions being passed, Qualifying CREST Shareholders areexpected to receive a credit to their appropriate stock accounts in CREST inrespect of the Nil Paid Rights to which they are entitled on 28 November 2005.The Nil Paid Rights are expected to be enabled for settlement by CRESTCo as soonas practicable after Admission. The offer of Issue Shares to Qualifying CREST Shareholders will be made, on theterms and subject to the conditions set out in the Prospectus, at the time when(such Shareholders' stock accounts having been credited as described above) theNil Paid Rights are enabled for settlement by CRESTCo. 6. Other information The full terms of and conditions to the Rights Issue, including the procedurefor acceptance and payment and the procedure in respect of rights not taken up,is set out in the Prospectus, which is expected to be issued today. In addition,the Prospectus will be accompanied by a notice convening the EGM. 7. Expected timetable of principal events It is currently anticipated that the Rights Issue will proceed in accordancewith the following timetable: Posting of the Prospectus to Qualifying Shareholders 2 November 2005 Record Date for the Rights Issue 23 November 2005 Latest time for receipt of Forms of Proxy 10.00 a.m. on 23 November 2005 Extraordinary General Meeting 10.00 a.m. on 25 November 2005 Despatch of Provisional Allotment Letters (to Qualifying non-CREST 25 November 2005Shareholders only) Admission and expected commencement of dealings in Issue Shares, nil paid 8.00 a.m. on 28 November 2005 Nil Paid Rights and Fully Paid Rights enabled in CREST and Nil Paid Rights as soon as practicable aftercredited to stock accounts in CREST (Qualifying CREST Shareholders only) 8.00 a.m.on 28 November 2005 Shares marked "Ex-Rights" by the London Stock Exchange 8.00 a.m. on 28 November 2005 Latest recommended time and date for requesting withdrawal of Nil Paid Rights 4.30 p.m. onor Fully Paid Rights from CREST 8 December 2005 Recommended latest time and date for depositing renounced Provisional 3.00 p.m. onAllotment Letters, nil paid or fully paid, into CREST or for dematerialising 12 December 2005Nil Paid Rights or Fully Paid Rights into a CREST stock account Latest time and date for splitting Provisional Allotment Letters, nil paid or 3.00 p.m. onfully paid 14 December 2005 Latest time and date for acceptance and payment in full and registration of 11.00 a.m. onrenounced Provisional Allotment Letters 16 December 2005 Announcement of results of the Rights Issue through a Regulatory Information by 20 December 2005Service Dealings expected to commence in Issue Shares, fully paid 8.00 a.m. on 21 December 2005 Date on which Issue Shares will be credited to CREST stock accounts in 21 December 2005uncertificated form Date for despatch of definitive share certificates for Issue Shares held in 28 December 2005certificated form Notes: (i) References to times in this document are to London time unlessotherwise stated. (ii) The dates set out in the "Expected timetable of principal events"above and mentioned throughout this announcement may be adjusted by the Company,with the consent of Numis, in which event details of the new dates will benotified to the UK Listing Authority (or the FSA, as appropriate), the LondonStock Exchange and, where appropriate, to Shareholders. 8. Definitions The following definitions apply throughout this announcement, unless the contextrequires otherwise: "Admission" the admission of the Issue Shares, nil paid, to (i) the Official List becoming effective in accordance with the Listing Rules of the UKLA and (ii) trading on the London Stock Exchange's market for larger and established companies becoming effective in accordance with the Admission and Disclosure Standards of the London Stock Exchange "Berkley Insurance Company" a wholly owned subsidiary of W R Berkley Corporation "Board" or "Directors" the directors of the Company "certificated form" not in uncertificated form "Chase Nominees" a nominee company through which Berkley Insurance Company holds shares in Kiln "CREST" the relevant system (as defined in the CREST Regulations) in respect of which CRESTCo is the Operator (as defined in the CREST Regulations) "CRESTCo" CRESTCo Limited, the operator of CREST "CREST Regulations" the Uncertificated Securities Regulations 2001 (SI 2001/3755), as amended "Enlarged Share Capital" the issued share capital of the Company as it will be immediately following the Rights Issue (assuming the maximum 87,413,607 Issue Shares are issued pursuant to the Rights Issue) "ECA" the economic capital assessment being the capital requirement for a member participating on a Lloyd's Syndicate "Existing Ordinary Shares" the 203,965,084 Ordinary Shares in issue as at the date of this announcement "Extraordinary General Meeting" or "EGM" the extraordinary general meeting of the Company convened by a notice which will be enclosed with the Prospectus, and any adjournment thereof "Form of Proxy" the form of proxy for use by Shareholders in connection with the EGM "FSA" the Financial Services Authority "Fully Paid Rights" fully paid rights to subscribe for Issue Shares pursuant to the Rights Issue "GQS arrangement" an arrangement between a corporate member at Lloyd's and a reinsurance company whereby the reinsurance company provides security, in a form acceptable to Lloyd's which the corporate member uses to satisfy part of its funds at Lloyd's and in return the reinsurer receives a proportional share in the results of the member, less an amount for overriding commission on premiums and profit commission on a positive underwriting result "Issue Price" 87p per Issue Share "Issue Shares" up to 87,413,607 new Ordinary Shares which are to be issued by the Company pursuant to the Rights Issue "Kiln" or "the Company" Kiln plc "Kiln Corporate Members" Kiln Underwriting Limited, Kiln Underwriting (308) Limited, Kiln Underwriting (510) Limited, Kiln Underwriting (807) Limited, Kiln Underwriting (807) No. 2 Limited and R J Kiln & Co (No. 2) Limited "Kiln Group" or "Group" Kiln and its subsidiary and associated undertakings "Lexicon Partners" Lexicon Partners Limited, a company regulated in the United Kingdom by the FSA "Lloyd's" or "the Society" the Society and Corporation of Lloyd's created and governed by the Lloyd's Acts 1871-1982, including the Council of Lloyd's (and its delegates and other persons through whom the Council may act), as the context may require "London Stock Exchange" London Stock Exchange plc "Nil Paid Rights" rights to subscribe for Issue Shares, nil paid, pursuant to the Rights Issue "Numis" Numis Securities Limited, a company regulated in the United Kingdom by the FSA "Official List" the Official List of the UKLA "Ordinary Shares" the ordinary shares of one penny each in the capital of the Company from time to time "Prospectus" the prospectus relating to Kiln plc and the Issue Shares prepared in accordance with the prospectus rules of the Financial Services Authority "Provisional Allotment Letters" the renounceable provisional allotment letters to be despatched to Qualifying non-CREST Shareholders in respect of the Issue Shares to be provisionally allotted to them and "Provisional Allotment Letter" shall be construed accordingly "Qualifying CREST Shareholder" Qualifying Shareholders whose Existing Ordinary Shares on the register of members of the Company on the Record Date are in uncertificated form "Qualifying non-CREST Shareholder" Qualifying Shareholders whose Existing Ordinary Shares on the register of members of the Company on the Record Date are in certificated form "Qualifying Shareholders" Shareholders on the register of members of the Company on the Record Date other than those Overseas Shareholders (excluding Berkley Insurance Company through its nominee Chase Nominees) who are resident in, or who are citizens of, or who have registered addresses in Canada, Japan, Australia, New Zealand, the Republic of South Africa, the Republic of Ireland or the United States (or any of its states, territories or possessions) "Record Date" the record date for the Rights Issue, being the close of business on 23 November 2005 "Resolutions" the resolutions to be proposed at the EGM contained in the notice of EGM which is to be enclosed with the Prospectus "Rights Issue" the proposed issue to Qualifying Shareholders of Issue Shares by way of rights on the basis described in the Prospectus and, in the case of Qualifying non-CREST Shareholders, in the Provisional Allotment Letters "R J Kiln" R.J. Kiln & Co. Limited, a wholly-owned subsidiary of the Company and the managing agent of the Syndicates "Shareholders" holders of Ordinary Shares "Syndicates" syndicates 308, 510, 557, and 807 and "Syndicate" means, any one of the Syndicates as the context requires "uncertificated form" shares recorded on the Company's register of Shareholders as being held in uncertificated form, title to which may be transferred by means of an instruction issued in accordance with the rules of CREST "UK Listing Authority" or "UKLA" the UK Listing Authority, a division of the FSA acting in its capacity as competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000, as amended "Underwriting Agreement" the conditional underwriting agreement dated 2 November 2005 between the Company and Numis "United Kingdom" or "UK" the United Kingdom of Great Britain and Northern Ireland "United States" or "US" the United States of America, its territories and possessions, any State of the United States, the District of Columbia and all other areas subject to its jurisdiction "US Hurricanes" Hurricanes Katrina and Rita, which took place in August and September 2005 causing destruction in the Gulf of Mexico and in the southern United States "US Terror Attacks" the terrorist attacks on the World Trade Centre in New York and the Pentagon in Washington DC, together with the aviation crash in Pittsburgh, all of which took place on 11 September 2001 "W R Berkley Corporation" W. R. Berkley Corporation of 475 Steamboat Road, Greenwich, Connecticut, USA "W R Berkley Group" W R Berkley Corporation and its subsidiaries and associated undertakings including without limitation Berkley Insurance Company This information is provided by RNS The company news service from the London Stock Exchange